Below is a raw (and likely hideous) rendition of the
original report.
(PDF)

United States General Accounting Office
GAO Testimony
Before the Committee on Veterans’ Affairs, U.S. Senate
For Release on Delivery
Expected at
2:30 p.m.
YEAR 2000 COMPUTING
Tuesday,
April 20, 1999 CRISIS
Key Actions Remain to
Ensure Delivery of Veterans
Benefits and Health Services
Statement of Joel C. Willemssen
Director, Civil Agencies Information Systems
Accounting and Information Management Division
GAO/T-AIMD-99-152
Mr. Chairman and Members of the Committee:
We appreciate the opportunity to participate in today’s hearing on the
Department of Veterans’ Affairs (VA) efforts to address the Year 2000 (Y2K)
computer problem. We will focus on the Y2K readiness of automated
systems that support the delivery of benefits and health care services, the
compliance status of biomedical equipment used in patient care, and the
Y2K readiness of the pharmaceutical and medical-surgical manufacturers
upon which VA relies. In discussing biomedical equipment and
pharmaceutical manufacturers, we will also share with you information on
the Food and Drug Administration’s (FDA) Y2K efforts.1
In brief, VA continues to make progress in its Y2K readiness. However, key
actions remain to be performed. For example, the Veterans Benefits
Administration (VBA) and Veterans Health Administration (VHA) have not
yet completed testing of their mission-critical systems to ensure that these
systems can reliably accept future dates—such as January 1, 2000. Also,
VHA has not completed Y2K assessments of its facility systems, which can
be essential to ensuring continuing health care. In addition, neither VA nor
FDA had implemented our prior recommendation to review the test results
for biomedical equipment used in critical care/life support environments.
Further, VHA’s pharmaceutical operations are at risk because the
automated systems supporting its consolidated mail outpatient pharmacies
are not Y2K compliant. Finally, VHA does not know if its medical facilities
will have a sufficient supply of pharmaceutical and medical-surgical
products on hand because it does not have complete information on the
Y2K readiness of these manufacturers. It is critical that these concerns be
addressed if VA is to continue reliably delivering benefits and health care.
1
Biomedical equipment refers to both medical devices regulated by FDA, within the Department of
Health and Human Services, and scientific and research instruments, which are not subject to FDA
regulation.
Page 1 GAO/T-AIMD-99-152
Key Actions Remain to Like many organizations, VA faces the possibility of computer system
failures at the turn of the century due to incorrect information processing
Ensure That VA Can relating to dates. The reason for this is that in many systems, the year 2000
Deliver Benefits and is indistinguishable from 1900, since the year is represented only by “00.”
This could make veterans who are eligible for benefits and medical care
Health Care Into the appear ineligible. If this happens, the issuance of benefits and the provision
Next Century of medical care that veterans rely on could be delayed or interrupted.
As we reported last August,2 VBA had made progress in addressing the
recommendations in our May 1997 report3 and in making its information
systems Y2K compliant. For example, VBA changed its Y2K strategy from
developing new systems to converting existing ones. It also reported it had
renovated 75 percent of its mission-critical applications as of June 1998. At
the same time, VHA reported it had assessed all and renovated the vast
majority of its mission-critical information systems. Despite this progress,
VBA was making limited progress in renovating two key mission-critical
applications—the compensation and pension online application and the
Beneficiary Identification and Record Locator Sub-System. And, except for
its Insurance Service, VBA had not developed business continuity and
contingency plans for its program services—Compensation and Pension
(the largest), Education, Loan Guaranty, and Vocational Rehabilitation and
Counseling—to ensure that they would continue to operate if Y2K failures
occurred.
VHA's Y2K program likewise had areas of concern. For example, although
VHA’s medical facilities had hospital contingency plans, as required by the
Joint Commission on Accreditation of Healthcare Organizations, they had
not yet completed Y2K business continuity and contingency plans. To
address these areas and to reduce the likelihood of delayed or interrupted
benefits and health care services, we recommended that VA
• reassess its Y2K mission-critical efforts for the compensation and
pension online application and the Beneficiary Identification and
Record Locator Sub-System, as well as other information technology
initiatives, such as special projects, to ensure that the Y2K efforts have
2Year 2000 Computing Crisis: Progress Made in Compliance of VA Systems, But Concerns Remain
(GAO/AIMD-98-237, August 21, 1998).
3
Veterans Benefits Computer Systems: Risks of VBA’s Year 2000 Efforts (GAO/AIMD-97-79, May 30,
1997).
Leter Page 2 GAO/T-AIMD-99-152
adequate resources, including contract support, to achieve compliance
in time;
• establish critical deadlines for the preparation of business continuity
and contingency plans for each core business process or program
service so that mission-critical functions affecting benefits delivery can
be carried out even if software applications and commercial-off-the-
shelf (COTS) products fail, including a description of resources, staff
roles, procedures, and timetables needed for implementation; and
• ensure rapid development of business continuity and contingency plans
for each medical facility so that mission-critical functions affecting
patient care can be carried out if software applications, COTS products,
and/or facility-related systems and equipment do not function properly,
including a description of resources, staff roles, procedures, and
timetables needed for implementation.4
VA Continues to Make VA has been responsive to our recommendations. For example, VBA
Progress reassessed its mission-critical efforts for the compensation and pension
online application and the Beneficiary Identification and Record Locator
Sub-System, as well as other information technology initiatives. It also
reallocated resources to ensure that the Y2K efforts had adequate
resources, including contract support, to achieve compliance.
In addition, VBA completed a draft business continuity and contingency
plan in January 1999 for its core business processes, as well as a related
planning template for its regional offices. The plan provides a high-level
overview of the resources, staff roles, procedures, and timetables for its
implementation. It addresses risks, including mitigation actions to reduce
the impact of Y2K-induced business failures, and analyzes the effect on
each business line of a number of potential Y2K disasters—such as loss of
electrical power, loss of communications, loss of data processing
capabilities, and failure of internal infrastructure. According to VBA, the
plan, which it expects to test this August, is an evolving document, to be
revised and updated periodically until January 1, 2000.
VBA’s plan makes no reference to contingencies for the failure of three of
VBA’s benefits payment systems—Compensation and Pension, Education,
and Vocational Rehabilitation and Counseling. However, it is currently
developing a payment contingency plan for these systems and expects this
4
GAO/AIMD-98-237, August 21, 1998.
Page 3 GAO/T-AIMD-99-152
to be completed in May 1999. A VBA official told us that the payment
contingency plan should have been referenced in VBA’s business continuity
and contingency plan and will be in future versions. The current plan also
does not contain the designation of an information technology security
coordinator and a physical security coordinator—individuals that VBA
acknowledges are essential to the agency’s Y2K efforts—with responsibility
for ensuring overall security for VBA's network and web site and for
backing up data storage before, during, and following January 1, 2000. This
type of information will be necessary if security-related failures occur.
According to VBA, it expects to designate these individuals by August 1999.
VHA has also made progress in developing business continuity and
contingency plans for its medical facilities. Last month, VHA issued its
Patient-Focused Year 2000 Contingency Planning Guidebook to its medical
facilities describing actions they can take to minimize Y2K-related
disruptions to patient care. The guidebook discusses how a medical facility
should develop contingency plans for each major hospital function—such
as radiology, pharmacy, and laboratory—as well as for each major support
function—such as telecommunications, facility systems, medical devices,
and automated information systems. The guidebook also contains
examples of plans, policies, and solutions for problems that a medical
facility may face and provides Y2K templates describing the areas a facility
should address by specific hospital function. VA provided this guidebook to
the medical facilities early last month and expects the facilities to use it to
prepare their individual business continuity and contingency plans, set to
be completed by April 30. The guidebook stresses that these plans should
be tested and suggests that the medical facilities begin testing in June.
The guidebook addresses external emergency preparedness as well as
internal operations. Specifically, it discusses three functions that a medical
facility should perform in order to ensure that potential external hazards
are considered and planned for. These are (1) performing an assessment of
hazard vulnerabilities—that is, the types and kinds of Y2K problems that
are anticipated within the community, (2) conducting an inventory of
community resources—people, money, clinical space, supplies, and
equipment—available to address these hazards, and (3) closing the gap
between vulnerabilities and capabilities by putting into place measures that
will mitigate potential disruptions in critical services by developing new
working relationships with various government agencies, non-VA health
care organizations, and vendors of critical supplies.
Page 4 GAO/T-AIMD-99-152
In addition to implementing our recommendations, VA continues to make
progress renovating, validating, and implementing its systems. On March
31, 1999, VA reported to the Office of Management and Budget (OMB) that
the department had renovated and implemented all of the mission-critical
applications supporting its 11 systems areas. As shown in table 1, VBA has
six of these areas, and VHA has two.
Table 1: Reported Status of VA’s Mission-Critical Computer Systems Areas and
Their Applications
Component/office Number of applications
(number of systems) Systems areas renovated or replaced
Veterans Benefits Compensation and Pension 30
Administration (6) Education 24
Insurance 3
Loan Guaranty 19
Vocational Rehabilitation 4
Administrative 27
Total 107
Veterans Health Veterans Health Information
Administration (2) Systems and Technology
Architecture 105
Veterans Health
Administration Corporate
Systems 95
Total 200
National Cemetery System Burial Operations Support
(1) System/Automated
Monument Application
System 1
Reengineer 1
Total 2
Office of Financial Personnel and Accounting
Management (2) Integrated Data 8
Financial Management
System 1
Total 9
VA total 11 318a
a
Of this total, 316 applications were renovated and two were replaced.
Source: VA. We have not independently verified this information.
Page 5 GAO/T-AIMD-99-152
Testing of Mission-Critical Complete and thorough Y2K testing is essential to providing reasonable
Systems Not Yet Complete assurance that new or modified systems will process dates correctly and
will not jeopardize an organization’s ability to perform core business
operations. Because the Y2K problem is so pervasive, potentially affecting
an organization’s systems software, applications software, databases,
hardware, firmware, embedded processors, telecommunications, and
interfaces, the requisite testing can be extensive and expensive. Experience
is showing that Y2K testing is consuming between 50 and 70 percent of a
Y2K project’s time and resources.
According to our Y2K guide,5 to be done effectively, testing should be
planned and conducted in a structured and disciplined fashion. Our guide
describes a step-by-step framework for managing Y2K testing, which
includes the following key processes:
• Software unit testing to verify that the smallest defined module of
software (individual subprograms or procedures) continues to work as
intended.
• Software integration testing to verify that units of software, when
combined, continue to work together as intended. Typically, integration
testing focuses on ensuring that the interfaces work correctly and that
the integrated software meets requirements.
• System acceptance testing to verify that the complete system—that is,
the full complement of application software running on the target
hardware and systems software infrastructure—satisfies specific
requirements and is acceptable to users. This testing can be run
separately or in some combination in an operational environment
(actual or simulated) and collectively verifies that the entire system
performs as expected.
According to VBA and VHA officials, their testing criteria were based on
their software development life cycle guidance documents. They said that
upon successful completion of software unit and integration testing, a
system is considered Y2K compliant. They said this type of testing had been
completed for all of their mission-critical systems.
As of March 31, 1999, neither VBA nor VHA had completed systems
acceptance testing—which requires that each system be tested, including
5
Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21, November 1998).
Page 6 GAO/T-AIMD-99-152
full future-date testing, on a compliant platform—for all their mission-
critical systems. Specifically, according to VBA officials, the agency had
completed systems acceptance testing for half of its mission-critical
systems—Insurance, Loan Guaranty, and Vocational Rehabilitation and
Counseling. According to VBA’s Hines, Illinois, data center Y2K
coordinator, systems acceptance testing of the Compensation and Pension
systems just started on April 14, 1999. According to a VBA official, one of
the reasons for the late systems testing was that the new IBM compiler6 at
its Hines data center was not available for use until February 1999.
According to VBA, the Compensation and Pension and most of the
Education systems will be future-date tested throughout April.
VHA also plans to begin system acceptance testing of its mission-critical
systems this month and complete it this June. According to VHA officials,
they could not perform this type of testing before March of this year
because VHA did not have a separate Y2K-compliant test environment to
isolate the testing from the hospital systems in use.
In addition to testing of individual systems, end-to-end testing of multiple
systems is also critical. End-to-end testing, as defined in our test guide,
verifies that a defined set of interrelated systems, which collectively
support an organizational core business area or function, continues to
work as intended in an operational environment, either actual or simulated.
For example, in order to successfully process a compensation benefit
payment to a veteran, VBA’s Compensation and Pension System must work
correctly with its Beneficiary Identification and Records Locator Sub-
System, Treasury’s Financial Management System, the Federal Reserve
System, and financial institution systems.
VBA and VHA plan to conduct end-to-end testing between now and this
July. VBA is defining end-to-end testing as verification that core mission-
critical business functions, including benefits payments and vendor and
payroll payments, process correctly. The interfaces between VBA’s benefits
systems and Treasury’s Financial Management System are to be tested in
May. VBA also plans to test transactions that interface with VHA systems,
such as information related to veteran eligibility. VHA is defining end-to-
end testing as verification that core mission-critical business functions,
including patient-care transactions and vendor and payroll payments,
6
A compiler is a computer program that converts human-readable source code into a sequence of
machine instructions that the computer can run.
Page 7 GAO/T-AIMD-99-152
process correctly. Once these tests are completed, VBA and VHA plan to
conduct a “business process simulation” during the July 4, 1999, weekend.
This simulation of day-to-day work at VA is to include users at the VBA
regional offices and VHA test laboratories, who will simulate various
transactions and process them through a set of interrelated systems
necessary to complete a core business function. VBA expects to pretest the
business process simulation during May.
Assessment of VHA’s VA’s facility systems are essential to the continued delivery of health care
Facility Systems Not Yet services. For example, heating, ventilating, and air conditioning equipment
is used by hospitals to ensure that contaminated air is confined to a
Complete
specified area such as an isolation room or patient ward. If computer
systems used to maintain these systems were to fail, any resulting climate
fluctuations could affect patient safety.
Despite their importance, VHA has not yet completed assessments of its
facility systems. As of February 28, 1999, VHA medical facilities reported
that they had assessed 55 percent of their facility systems. According to
VHA’s Director of Safety and Technical Programs, the remaining 45 percent
have not been fully assessed primarily because (1) facility systems tend to
be a combination of unique elements that have to be separately assessed
for compliance—a time-consuming process—and (2) VHA is still awaiting
compliance status information from facility-system manufacturers. VHA
has not established milestones for completing assessments and
implementation of compliant facility systems. To help ensure that sufficient
time remains to complete these activities, we recommend that VHA
consider setting such deadlines.
In the event that facility-related systems and equipment do not function
properly due to Y2K problems, VHA medical facilities will need to ensure
that they have business continuity and contingency plans addressing how
mission-critical functions affecting patient care will be carried out.
According to VHA’s Director of Safety and Technical Programs, most of
VHA’s facility systems have some kind of manual override or reset that will
allow them to continue functioning after a Y2K problem. The director
agreed, however, with the importance of developing contingency plans that
fully document continued delivery of essential services in the event of a
facility system failure. VHA medical facilities expect to have individual
business continuity and contingency plans completed by April 30.
Page 8 GAO/T-AIMD-99-152
On April 14, 1999, VA informed us that its February 28, 1999, report
contained an error. The corrected numbers for facility systems (after fixing
the reporting error) at the end of February were 91 percent assessed and 9
percent not assessed.
Biomedical Equipment: The question of whether biomedical equipment such as magnetic
resonance imaging (MRI) systems, x-ray machines, pacemakers, and
Additional Status cardiac monitoring equipment can be counted on to work reliably on and
Information Available, after January 1, 2000, is also critical to VHA. To the extent that this
equipment uses embedded computer chips, it is vulnerable to the Y2K
But Test Results Not problem. Such vulnerability carries with it possible safety risks. This could
Reviewed range from the more benign—such as incorrect formatting of a printout—
to the most serious—such as incorrect operation of equipment with the
potential to adversely affect the patient. The degree of risk depends in large
part on the role the equipment plays in a patient’s care.
Additional Biomedical Last September we testified that VHA was making progress in assessing its
Equipment Status biomedical equipment, but that it did not know the full extent of the Y2K
problem with this equipment because it had not received compliance
Information Available
information from 398 manufacturers (26.7 percent).7 According to VHA, as
of March 16, 1999, the number of nonresponsive manufacturers had been
reduced to 126 (8.5 percent).8 As shown in table 2, about 19 percent of the
manufacturers in VHA’s database of suppliers had at least one biomedical
equipment item that was either noncompliant or conditionally compliant.
7Year2000 Computing Crisis: Leadership Needed to Collect and Disseminate Critical Biomedical
Equipment Information (GAO/T-AIMD-98-310, September 24, 1998).
8
According to VHA, 101 of the 126 letters requesting compliance information sent to manufacturers
were marked “return to sender.”
Page 9 GAO/T-AIMD-99-152
Table 2: Status of Manufacturer Responses to VHA as of March 16, 1999
Percentage of
Category Number of manufacturers manufacturers
Compliant manufacturersa 816 55.2
Noncompliant manufacturersb 126 8.5
Conditional-compliant manufacturersc 156 10.5
Pending manufacturersd 29 2.0
Manufacturers merged or bought out 226 15.3
Nonresponsive manufacturerse 126 8.5
Total 1,479 100.0
a
For inclusion in this category, 100 percent of the manufacturer’s products had to be considered
compliant.
bFor inclusion in this category, only one of the manufacturer’s products had to be considered
noncompliant.
c
For inclusion in this category, the manufacturer had to have no noncompliant equipment, no
equipment pending, and at least one conditional-compliant item.
d
For inclusion in this category, the manufacturer had to have no noncompliant equipment and at least
one equipment item pending.
eFor inclusion in this category, VHA had to have no compliance information from the manufacturer.
Source: VHA. We did not independently verify these data.
To identify specific biomedical equipment in the inventories of VHA’s
medical facilities that still require Y2K compliance status information from
manufacturers, VHA’s Chief Network Officer sent a letter to the directors of
VHA's 22 Veterans Integrated Service Networks (VISN). This letter
requested that they (1) review VHA’s list of manufacturers that have yet to
respond to VHA’s request for compliance information and compare it with a
list of manufacturers from which their medical facilities still require
compliance information and (2) indicate the equipment item that the
facility owns for each manufacturer. According to VHA’s Y2K project
director, as of mid-March—with 135 of 147 medical reporting sites—
47 biomedical equipment items involving 35 manufacturers were identified
as still requiring compliance status information. The project director told
us that VHA medical facilities have been instructed to replace or eliminate
equipment in their inventories for which they do not know the compliance
status by June 30. According to VHA's February 1999 status report on
medical devices, medical facilities estimated that the total cost of
renovations will be about $41 million.
Page 10 GAO/T-AIMD-99-152
We have previously reported that most manufacturers citing noncompliant
products listed incorrect display of date and/or time as the Y2K problem.9
According to VA, these cases do not present a risk to patient safety because
health care providers, such as physicians and nurses, can work around the
problem. Of more serious concern are situations in which devices depend
on date calculations—the results of which can be incorrect. One
manufacturer cited the example of a product used for planning delivery of
radiation treatment using a radioactive isotope as the source. An error in
calculating the strength of the radiation source on the day of treatment
could result in a dose that is too high or too low, which could have an
adverse effect on the patient. Other examples of equipment presenting risk
to patient safety identified by manufacturers to FDA include hemodialysis
delivery systems; therapeutic apheresis systems;10 alpha-fetoprotein kits
for neural tube defects;11 various types of medical imaging equipment; and
systems that store, track, and recall images in chronological order.
To track the compliance status of its biomedical equipment, VHA uses a
monthly status report on medical devices based on information provided
by the VISNs. According to the February 1999 report, approximately
426,000 of 531,000 medical devices in VHA medical facilities are Y2K
compliant. Of the remaining devices, 86,452 were identified as conditional-
compliant or were not assessed for Y2K compliance because the
manufacturers certified that the equipment contained no software or
embedded chips, and 19,073 were reported as being noncompliant. Of the
noncompliant devices identified, 15,621 are to be repaired, 1,582 are to be
replaced, 757 are to be used as is, 255 are to be retired, and 858 are still
awaiting a decision on the remedy. According to VHA’s Chief Biomedical
Engineer, most of the noncompliant devices identified incorrectly
displayed date/time.
As we reported last September, FDA was also trying to determine the Y2K
compliance status of biomedical equipment.12 Its goal is to provide a
9
Year 2000 Computing Crisis: Compliance Status of Many Biomedical Equipment Items Still Unknown
(GAO/AIMD-98-240, September 18, 1998).
10
Such equipment allows therapeutic apheresis, which refers to the exchange or purification of blood
plasma. Therapeutic apheresis is recognized as a successful treatment for more than 40 autoimmune
diseases.
11Devices that use computer calculations of gestational status to help assess the risk of neural tube
defects in the fetuses of pregnant women.
12
GAO/AIMD-98-240, September 18, 1998.
Page 11 GAO/T-AIMD-99-152
comprehensive, centralized source of information on the Y2K compliance
status of biomedical equipment used in the United States and to make this
information publicly available on a web site. At the time, however, FDA had
a disappointing response rate from manufacturers to its letter requesting
compliance information. And, while FDA made this information available
to the public, it was not detailed enough to be useful. Specifically, FDA’s list
of compliant equipment lacked information on particular make and model.
To provide more detailed information on the compliance status of
biomedical equipment, as well as to integrate more detailed compliance
information gathered by VHA, we recommended that VA and the
Department of Health and Human Services (HHS) jointly develop a single
data clearinghouse that provides such information to all users. We said
development of the clearinghouse should involve representatives from the
health-care industry, such as the Department of Defense and the Health
Industry Manufacturers Association. We recommended that the
clearinghouse contain such information as (1) the compliance status of all
biomedical equipment by make and model and (2) the identity of
manufacturers that are no longer in business. We also recommended that
VHA and FDA determine what actions should be taken regarding
biomedical equipment manufacturers that have not provided compliance
information.
In response to our recommendation, FDA—in conjunction with VHA—has
established the Federal Year 2000 Biomedical Equipment Clearinghouse.
With the assistance of VHA, the Department of Defense, and the Health
Industry Manufacturers Association, FDA has made progress in obtaining
compliance-status information from manufacturers. For example,
according to FDA, 4,251 biomedical equipment manufacturers had
submitted data to the clearinghouse as of April 5, 1999. As shown in figure
1, about 54 percent of the manufacturers reported having products that do
not employ a date, while about 16 percent reported having date-related
problems such as incorrect display of date/time. FDA is still awaiting
responses from 399 manufacturers.
Page 12 GAO/T-AIMD-99-152
Figure 1: Biomedical Equipment Compliance-Status Information Reported to FDA by
Manufacturers as of April 5, 1999
2,500
2,299
2,000
1,500
1,000 880
669
403
500
0
ot ing te-
d
rte ite
one p loy da po eb s
d h e
ts t em iant t
wi lems
r w
uc a da cts mpl ts u s ’s
od u uc prob tat urer
Pr ploy rod co o d t s t
em l p re Pr ated uc fac
Al te a rel od u
Pr man
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Note: Total number of manufacturers = 4,251.
Source: FDA.
FDA has also expanded the information in the clearinghouse. For example,
users can now find information on manufacturers that have merged with or
have been bought out by other firms. In collaboration with the National
Patient Safety Partnership,13 FDA is in the process of obtaining more
detailed information from manufacturers on noncompliant products, such
as make and model and descriptions of the impact of the Y2K problem on
products left uncorrected. For example, FDA sent a letter dated March 29,
1999, to medical device manufacturers requesting that they submit to the
clearinghouse complete lists of individual product models that are Y2K
compliant.
13
The National Patient Safety Partnership is a coalition of public and private health care providers,
including VA, the American Medical Association, the American Hospital Association, the American
Nurses Association, and the Joint Commission on Accreditation of Healthcare Organizations.
Page 13 GAO/T-AIMD-99-152
Review of Biomedical We reported last September that VHA and FDA relied on manufacturers to
Equipment Test Results validate, test, and certify that equipment is Y2K compliant.14 We also
reported that there was no assurance that the manufacturers adequately
Lacking
addressed the Y2K problem for noncompliant equipment because FDA did
not require medical device manufacturers to submit test results to it
certifying compliance. Accordingly, we recommended that VA and HHS
take prudent steps to jointly review manufacturers’ compliance test results
for critical care/life support biomedical equipment. We were especially
concerned that VA and FDA review test results for equipment previously
determined to be noncompliant but now deemed by manufacturers to be
compliant, or equipment for which concerns about compliance remain. We
also recommended that VA and HHS determine what legislative, regulatory,
or other changes were necessary to obtain assurances that the
manufacturers’ equipment was compliant, including performing
independent verification and validation of the manufacturers’
certifications.
At the time, VA stated that it had no legislative or regulatory authority to
implement the recommendation to review test results from manufacturers.
In its response, HHS stated that it did not concur with our recommendation
to review test results supporting medical device manufacturers’
certifications that their equipment is compliant. It believed that the
submission of appropriate certifications of compliance was sufficient to
ensure that the certifying manufacturers are in compliance. HHS also
stated that it did not have the resources to undertake such a review, yet we
are not aware of HHS’ requesting resources from the Congress for this
purpose.
More recently, VHA’s Chief Biomedical Engineer told us that VHA medical
facilities are not requesting test results for critical care/life support
biomedical equipment; they also are not currently reviewing the test results
available on manufacturers’ web sites. He said that VHA’s priority is
determining the compliance status of its biomedical equipment inventory
and replacing noncompliant equipment. The director of FDA’s Division of
Electronics and Computer Science likewise said FDA sees no need to
question manufacturers’ certifications.
14
GAO/AIMD-98-240, September 18, 1998.
Page 14 GAO/T-AIMD-99-152
In contrast to VHA’s and FDA’s positions, some hospitals in the private
sector believe that testing biomedical equipment is necessary to prove that
they have exercised due diligence in the protection of patient health and
safety. Officials at three hospitals told us that their biomedical engineers
established their own test programs for biomedical equipment and, in many
cases, contacted the manufacturers for their test protocols. Several of
these engineers informed us that their testing identified some
noncompliant equipment that the manufacturers had earlier certified as
compliant. According to these engineers, to date, the equipment found to
be noncompliant all had display problems and was not critical care/life
support equipment. We were told that equipment found to be incorrectly
certified as compliant included a cardiac catheterization unit, a pulse
oxymeter, medical imaging equipment, and ultrasound equipment.
VHA, FDA, and the Emergency Care Research Institute15 continue to
believe that manufacturers are best qualified to analyze embedded systems
or software to determine Y2K compliance. They further believe that
manufacturers are the ones with full access to all design and operating
parameters contained in the internal software or embedded chips in the
equipment. VHA believes that such testing can potentially cause irreparable
damage to expensive health care equipment, causing it to lock up or
otherwise cease functioning. Further, a number of manufacturers also have
recommended that users not conduct verification and validation testing.
We continue to believe that rather than relying solely on manufacturers'
certifications, organizations such as VHA or FDA can provide users of
medical devices with a greater level of confidence that the devices are Y2K
compliant through independent reviews of manufacturers’ compliance test
results. The question of whether to independently verify and validate
biomedical equipment that manufacturers have certified as compliant is
one that must be addressed jointly by medical facilities’ clinical staff,
biomedical engineers, and corporate management. The overriding criterion
should be ensuring patient health and safety.
15
An international, nonprofit health services research agency. This organization believes that superficial
testing of biomedical equipment by users may provide false assurances, as well as create legal liability
exposure for health care institutions.
Page 15 GAO/T-AIMD-99-152
VHA Pharmaceutical Another critical component to VA’s ability to deliver health care at the turn
of the century is ensuring that the automated systems supporting VHA’s
Operations Also Face medical facility pharmacies and its consolidated mail outpatient
Y2K Risks pharmacies (CMOP) are Y2K compliant. VHA reported that in 1998 it filled
about 72 million prescriptions for 3.4 million veterans, at an estimated cost
of about $2 billion. About half of the prescriptions were filled by the over
200 pharmacies located in VA’s medical centers, clinics, and nursing homes.
These pharmacies rely on the pharmaceutical applications in the Veterans
Health Information Systems and Technology Architecture (VISTA) for
(1) drug distribution and inventory management, (2) dispensing of drugs to
inpatients and outpatients, (3) patient medication information, and (4) an
electronic connection between the pharmacies and the CMOPs. Y2K
failures in these applications could impair the pharmacies’ ability to fill
prescriptions.
The remaining 50 percent of VHA’s prescriptions are filled by seven CMOPs,
geographically located throughout the United States. These facilities are
supported by automated systems provided by one of two contractors—
SI/Baker, Inc. and Siemens ElectroCom.16 For example, the CMOP
electronically receives a prescription for a veteran through the medical
center. The prescription is downloaded to highly automated dispensing
equipment to be filled. The filled prescription is then validated by a
pharmacist who compares the medication against a computerized image of
the prescribed medication. Afterward, the prescription is packaged and an
automatically generated mailing label is applied for delivery to the veteran.
Finally, the medical center is electronically notified that the prescription
has been filled. Because of the reliance on automation, the CMOPs’ ability
to fill prescriptions could be delayed or interrupted if a Y2K failure
occurred.
VHA has determined that the automated systems supporting its CMOPs are
not Y2K compliant. Specifically, neither of the systems provided by their
contractors is Y2K compliant. According to the Y2K coordinator for the
SI/Baker facilities, failure to make the SI/Baker systems Y2K compliant
may delay the filling of outpatient prescriptions. The SI/Baker systems are
used by three of VHA’s CMOPs—Hines, Illinois; Charleston, South Carolina;
and Murfreesboro, Tennessee; they handle about 58 percent of all
prescriptions filled by CMOPs. In contrast to the SI/Baker systems,
according to a contractor hired by the CMOPs that use these systems,
16
These include operating systems, databases, and pharmacy fulfillment application software.
Page 16 GAO/T-AIMD-99-152
failure to make the Siemens ElectroCom systems Y2K compliant may result
in delays in processing management reports for prescriptions filled, but not
in the actual filling of prescriptions.
Although the CMOPs plan to replace their noncompliant systems with
compliant ones, these systems are not scheduled to be implemented until
mid- to late-1999. As shown in table 3, the earliest estimated completion
date for implementing a compliant system is June 30, 1999, while the latest
is December 1, 1999.17 This leaves little time to address any unexpected
implementation problems.
Table 3: Schedule of Estimated Implementation Completion Dates and Current Daily
Workload by Consolidated Mail Outpatient Pharmacies
Estimated completion Current daily workload
Location date (prescriptions filled)
West Los Angeles, June 30, 1999
Californiaa 15,000
Bedford, Massachusettsa June 30, 1999 15,000
Dallas, Texasa June 30, 1999 14,000
Leavenworth, Kansasa July 31, 1999 16,000
Charleston, South September 1, 1999
Carolinab 23,000
Murfreesboro, Tennesseeb September 30, 1999 38,000
Hines, Illinoisb December 1, 1999 21,000
a
Siemens ElectroCom automation.
bSI/Baker, Inc. automation.
Source: VA.
Given the late schedule for implementing compliant systems, it is crucial
that the CMOPs develop business continuity and contingency plans to
ensure that veterans will continue to receive their medications if these
systems are not implemented in time or fail to operate properly. As of
March 31, VA had not completed a business continuity and contingency
plan for the CMOPs. The Y2K coordinator for the Siemens ElectroCom
17
In April 15, 1999, testimony before the Subcommittee on Oversight and Investigations, Committee on
Veterans’ Affairs, House of Representatives, VHA’s Y2K project director said that estimated
implementation dates would be revised so that the latest date is August 30, 1999.
Page 17 GAO/T-AIMD-99-152
system has been tasked with developing this plan, which is to be completed
by the end of this month.
Further, VA did not include the CMOP systems in its quarterly reports of
mission-critical systems to OMB. According to VHA’s Y2K project director,
VHA considered the CMOP systems to be COTS products and, therefore,
did not report them as mission-critical systems. Given the criticality of
these systems to VHA’s ability to fill prescriptions at the turn of the century,
we believe VA should reassess this decision. Reporting CMOPs as mission-
critical to VA top management and OMB would help ensure that necessary
attention is paid and action is taken.
VA Taking Action to VA, like other users of pharmaceutical and medical-surgical products,
Determine Y2K Readiness of needs to know whether it will have a sufficient supply of these items for its
customers. Therefore, it has taken a leadership role in the federal
Pharmaceutical and
government in determining whether manufacturers supplying these
Medical-Surgical products to VHA are Y2K-ready. This information is essential to VHA’s
Manufacturers medical facilities and CMOPs because of their “just-in-time”18 inventory
policy. Accordingly, they must know whether their manufacturers’
processes, which are highly automated,19 are at risk, as well as whether the
rest of the supply chain will function properly.
To determine the Y2K readiness of their suppliers, on January 8, 1999, VA’s
National Acquisition Center (NAC)20 sent a survey to 384 pharmaceutical
firms and 459 medical-surgical firms with which it does business. The
survey contained questions on the firms’ overall Y2K status and inquired
about actions taken to assess, inventory, and plan for any perceived impact
that the century turnover would have on their ability to operate at normal
levels. In addition, the firms were asked to provide status information on
progress made to become Y2K compliant and a reliable estimated date
when compliance will be achieved for business processes such as
(1) ordering and receipt of raw materials, (2) mixing and processing
product, (3) completing final product processing, (4) packaging and
18
This term refers to maintaining a limited inventory on hand.
19Pharmaceutical manufacturers rely on automated systems for production, packaging, and distribution
of their products, as well as for ordering of raw materials and supplies.
20
This organization is responsible for supporting VHA’s health care delivery system by providing an
acquisition program for items such as medical, dental, and surgical supplies and equipment;
pharmaceuticals; and chemicals. NAC is part of VA's Office of Acquisition and Materiel Management.
Page 18 GAO/T-AIMD-99-152
labeling product, and (5) distributing finished product to distributors/
wholesalers and end customers.
According to NAC officials, of the 455 firms that responded to the survey as
of March 31, 1999, about 55 percent completed all or part of the survey. The
remainder provided general information on their Y2K readiness status or
literature21 on their efforts. As shown in table 4, more than half (52
percent) of the pharmaceutical firms surveyed responded, with just less
than one-third (32 percent) of those respondents reporting that they are
compliant. Among the pharmaceutical firms that had not responded as of
March 31, however, were two of VA’s five largest suppliers.22 The three
large pharmaceutical suppliers that did respond provided general
information on their Y2K readiness status, rather than answering the
survey, and estimated that they will be compliant by June 30, 1999.
Table 4: Status of Companies Surveyed by VHA as of March 31, 1999
Responses Pharmaceutical Medical-surgical
Y2K compliant 65 166
Will be compliant by 1/1/2000 or earliera 90 70
Provided no compliant date 50 14
Total number of responses 205 250
Non-responses 179 209
Total number of firms surveyed 384 459
a
Estimated compliance status ranged from March 31, 1999 through January 1, 2000; about 71 percent
of pharmaceutical firms and 80 percent of medical-surgical firms estimated they will be compliant by
July 31, 1999. One firm responded that it will be compliant by January 1, 2000.
Source: VA. We did not independently verify these data.
Table 4 also shows that 54 percent of the medical-surgical firms surveyed
responded, with about two-thirds (166) of them reporting that they are Y2K
compliant. All five of VA’s largest medical-surgical suppliers have
responded. Specifically, two reported being compliant, two reported they
would be compliant by June 30, 1999, and the remaining supplier did not
report an expected compliance date.
21This
includes annual and quarterly financial reports required by the Securities and Exchange
Commission for companies listed on the New York Stock Exchange.
22
On April 14, 1999, a NAC official told us that of the two suppliers that had not responded as of March
31, one responded on April 12, and the other responded on April 14.
Page 19 GAO/T-AIMD-99-152
On March 17, 1999, NAC sent a second letter to its pharmaceutical and
medical-surgical suppliers, informing them of VA’s plans to make Y2K
readiness information previously provided to VA available to the public
through a web site (www.va.gov/oa&mm/nac/y2k). VA made the survey
results available on its web site on April 13, 1999. The letter also requested
that manufacturers that had not previously responded provide information
on their readiness. NAC’s Executive Director said that he would personally
contact any major VA supplier that does not respond. On a broader level,
VHA has taken a leadership role in obtaining and sharing information on
the Y2K readiness of the pharmaceutical industry. Specifically, VHA chairs
the Year 2000 Pharmaceuticals Acquisitions and Distributions
Subcommittee, which reports to the Chair of the President’s Council on
Year 2000 Conversion. The purpose of this subcommittee is to bring
together federal and pharmaceutical representatives to address issues
concerning supply and distribution as they relate to the year 2000. The
subcommittee consists of FDA, federal health care providers, and industry
trade associations such as the Pharmaceutical Research and Manufacturers
of America (PhRMA), Generic Pharmaceutical Industry Association, the
National Association of Chain Drug Stores, National Wholesale Druggists’
Association, and consumer advocates. Several of these trade associations
have surveyed their members on their Y2K readiness and made the results
available to the public. However, the information is not manufacturer-
specific or as detailed as VHA's survey results.
FDA’s Y2K Efforts for FDA’s oversight and regulatory responsibility for pharmaceutical and
Pharmaceutical and biological products23 is to ensure that they are safe and effective for public
use. Because of its concern about the Y2K impact on manufacturers of
Biological Products
these products, FDA has taken several actions to raise the Y2K awareness
Industries Were Initially of the pharmaceutical and biological products industries. In addition, it is
Focused on Awareness thinking about conducting a survey to determine the industry’s Y2K
readiness.
One of FDA’s actions to raise industry awareness was the January 1998
issuance of industry guidance by the Center for Biologics Evaluation and
Research (CBER) on the Y2K impact of computer systems and software
applications used in the manufacture of blood products. In addition, as
shown in table 5, FDA has issued several letters to pharmaceutical and
biological trade associations and sole-source drug manufacturers.
23
Biological products include vaccines, blood, and blood products.
Page 20 GAO/T-AIMD-99-152
Table 5: FDA Letters to Manufacturers Regarding Y2K
Date FDA source Recipient Purpose
October Center for Pharmaceutical To relay to members FDA’s expectation that the
1998 Drug Evaluation and manufacturer trade pharmaceutical industry would (1) make resolution of
Research associations Y2K a high priority, (2) ensure that production systems
were fixed and tested prior to January 1, 2000, and (3)
urge manufacturers to develop Y2K contingency plans.
October Center for Biologics Biologics manufacturer trade Same as above.
1998 Evaluation and Research associations
January 1999 Center for Sole-source drug Same as above. Also (1) noted that the impact of Y2K
Drug Evaluation and manufacturers on pharmaceutical safety, efficacy, and availability
Research merits special attention for firms who are the sole
manufacturers of drug components, bulk ingredients,
and finished products and (2) stated that
pharmaceutical industry suppliers must have Y2K-
compliant systems to protect against disruption in the
flow of product components, packaging materials, and
equipment to pharmaceutical manufacturers.
Source: FDA.
Further, on February 11, 1999, FDA’s director of emergency and
investigation operations sent a memorandum on FDA’s interim inspection
policy for the Y2K problem to the directors of FDA’s investigations branch.
The policy emphasizes FDA’s Y2K awareness efforts for manufacturers. It
states that FDA inspectors are to (1) inform the firm of FDA’s Y2K web page
(URL http://www.fda.gov/cdrh/yr2000/year2000.html), (2) provide the firm
with copies of the appropriate FDA Y2K awareness letter, (3) explain that
Y2K problems could potentially affect aspects of the firm’s operations,
including some areas not regulated by FDA, and that FDA anticipates that
firms will take prudent steps to ensure that they are not adversely affected
by Y2K, and (4) provide firms with a copy of FDA’s compliance policy guide
“Year 2000 (Y2K) Computer Problems.”
In addition, FDA and PhRMA jointly held a government/industry forum on
the Y2K preparedness of the pharmaceutical and biotech industries on
February 22, 1999. The objectives of this forum were to (1) share
information on Y2K programs conducted by health care providers,
pharmaceutical companies, FDA, and other federal agencies, (2) provide a
vehicle for networking, and (3) raise awareness.
On March 29, 1999, FDA revised its February 11, 1999, interim inspection
policy. The revision states that field inspectors are now to inquire about
Page 21 GAO/T-AIMD-99-152
manufacturers’ efforts to ensure that their computer-controlled or date-
sensitive manufacturing processes and distribution systems are Y2K
compliant. Inspectors are to include this information in their reports, along
with a determination of activities that firms have completed or started to
ensure that they will be Y2K compliant.
Further, FDA inspectors may review documentation in cases in which firms
have made changes to their computerized production or manufacturing
control systems to address Y2K problems. The purpose of this review is to
ensure that the changes were made in accordance with the firms’
procedures and applicable regulations. If inspectors determine that a firm
has not taken steps to ensure Y2K compliance, they are to notify their
district managers and the responsible FDA center.
FDA’s interim policy describes steps inspectors are to take in reviewing
manufacturers’ Y2K compliance. However, FDA stated that the primary
focus of its inspections for the remainder of 1999 will be to ensure that
products sold in the United States are safe and effective for public use and
comply with federal statutes and regulations, including “good
manufacturing practice” (GMP).24 FDA officials explained that the agency
does not have sufficient resources to perform both regulatory oversight of
the manufacturers and in-depth evaluations of firms’ Y2K compliance
activities.
Nevertheless, according to the March 29, 1999, memorandum, field
inspectors are to note any concerns they may have with a firm’s Y2K
readiness in the administrative remarks section of their inspection reports.
These reports are to be reviewed by FDA district managers. If the Y2K
concern appears to present a serious problem to a firm’s ability to produce
safe, effective medication, the district manager can discuss this issue with
FDA’s Office of Regulatory Affairs and determine a course of action.
However, FDA officials have stressed that the agency cannot take any
regulatory action toward the firm until a Y2K-related problem affects a
pharmaceutical or biological product.
Like VHA, FDA is interested in the impact of Y2K readiness of
pharmaceutical and biological products on the availability of products for
health care facilities and individual patients. FDA’s Acting Deputy
24
GMP requirements include federal standards for ensuring that products are high in quality and
produced under sanitary conditions (21 CFR parts 210, 211).
Page 22 GAO/T-AIMD-99-152
Commissioner for Policy informed us on March 24, 1999, that the agency is
thinking about surveying pharmaceutical and biological products
manufacturers, distributors, product repackagers, and others in the drug
dispensing chain, on their Y2K readiness and contingency planning. In
anticipation of a possible survey, the agency has published a notice in the
March 22, 1999, Federal Register regarding this matter. The Acting Deputy
Commissioner said that potential survey questions on contingency
planning would include steps the manufacturers are taking to ensure an
adequate supply of bulk manufacturing materials from overseas suppliers.
This is a key issue because, as we reported in March 1998,25 according to
FDA, as much as 80 percent of the bulk pharmaceutical chemicals used by
U.S. manufacturers to produce prescription drugs is imported.
In summary, VBA and VHA continue to make progress in preparing their
mission-critical systems for the year 2000. However, key actions remain to
be taken in the areas of mission-critical systems testing, VHA facility
systems compliance, and CMOP systems compliance. We also reiterate the
need for VHA and FDA to take prudent steps to ensure that the test results
of critical care/life support biomedical equipment are obtained and
reviewed. Finally, VHA needs information on the Y2K readiness of specific
pharmaceutical and medical-surgical manufacturers. Until this information
is obtained and publicized, VHA medical facilities and veterans will remain
in doubt as to whether an adequate supply of pharmaceutical and biological
products will be available. FDA and the pharmaceutical and biological
trade associations can play key roles in helping VHA obtain this
information and publicize the results in a single data clearinghouse.
In carrying out this assignment, we reviewed and analyzed VA's Y2K
documents and plans, comparing them against our guidance on Y2K
activities. We also reviewed and analyzed FDA documentation relating to
its Y2K efforts on biomedical devices and pharmaceutical manufacturers.
In addition, we visited selected VHA medical centers, VA data centers, and
VHA consolidated mail outpatient pharmacies to discuss their Y2K
activities, and interviewed VA and FDA officials on those activities. We also
interviewed officials of the Emergency Care Research Institute regarding
their statements on biomedical equipment testing. Finally, we interviewed
selected private hospital officials about their Y2K actions and
25
Food and Drug Administration: Improvements Needed in the Foreign Drug Inspection Program
(GAO/HEHS-98-21, March 17, 1998).
Page 23 GAO/T-AIMD-99-152
pharmaceutical trade associations on their Y2K readiness surveys of
pharmaceutical manufacturers.
Mr. Chairman, this concludes my statement. I would be pleased to respond
to any questions that you or other members of the Committee may have at
this time.
(511748) Leter Page 24 GAO/T-AIMD-99-152
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